The untold story surrounding a poverty alleviation mindset is that of long-term effects and nation building. Despite benevolent intentions of people and organizations seeking to help, many aid efforts that sound rational at face value actually harm the recipient country’s long term economic self-sufficiency prospects. For example, consider free handouts of bottled water and rice by non-governmental organizations (NGOs) in Haiti. In the immediate after-effects of the earthquake, these handouts were vital since production and distribution of such goods was disrupted. However, continued handouts began to destroy local markets by forcing water and rice producers out of business. In March 2010, even Haiti’s president René Préval asked the United States to “stop sending food aid”. Think about it, Haitian companies producing water or rice are unable to compete with free goods, and therefore cannot sell their products or make money. The end result is the creation of a state of dependency, in which the NGOs assume the companies’ role of providing food and water. This replacement effectively reduces the Haitians’ self-sufficiency, eliminates jobs, and increases the country’s reliance upon the donor country.
Catherine Lainé of the Appropriate Infrastructure Development Group (AIDG) business incubator in Haiti articulates the underlying problem of handouts very well in the excerpt below:
“When the NGO community talks about aid to developing countries, the focus is primarily on alleviating poverty…the future of Haiti cannot be built by focusing on poverty alleviation alone. Compare the language we use in the United States as the nation struggles through the current economic crisis: job creation, economic stimulation, higher education, job training, innovation and market growth…However, most money spent by the NGO community has primarily focused only on securing people’s short-term, basic needs. The aid community must turn greater attention to longer-term wealth creation. They need to strongly support and finance the development of [small and medium enterprises], the same types of businesses that are the economic engines of developed countries.” (2010 – full article)
So if we need to take a nation building approach instead of purely a poverty alleviation approach, what should we do?
To expand upon the earlier example of water and rice handouts, a viable alternative would be for NGOs to purchase rice from Haitian farmers or purify and distribute water produce in Haiti, rather than importing goods from Miami. This effort would enable the NGOs to provide food and drink for the masses and build up Haitian businesses in the process, allowing them to achieve the short-term goals they’re already targeting, as well as the long-term goals of restoring the country. The Inter-American Development Bank showed how this can be done through their work with a Haitian water company (DINEPA) after the earthquake in January 2010.